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ASSET RETIREMENT OBLIGATION:
 9 Months Ended
Sep. 30, 2012
ASSET RETIREMENT OBLIGATION:  
ASSET RETIREMENT OBLIGATION:

NOTE 8 - ASSET RETIREMENT OBLIGATION:

 

The Company maintains an estimated asset retirement obligation for its mining properties in Peru, as required by the Peruvian Mine Closure Law.  In accordance with the requirements of this law the Company’s closure plans were approved by the Peruvian Ministry of Energy and Mines (“MINEM”).  As part of the closure plans, commencing in January 2010 the Company is required to provide annual guarantees of $2.6 million over a 34 year period to furnish the funds for the asset retirement obligation.  In the near-term future the Company has pledged the value of its Lima office complex as support for this obligation.  The accepted value of the Lima office building, for this purpose, is $17 million. The closure cost recognized for this liability includes the cost, as outlined in its closure plans, of dismantling the Toquepala and Cuajone concentrators, the smelter and refinery in Ilo, and the shops and auxiliary facilities at the three units, including the Ilo marine trestle.

 

The following table summarizes the asset retirement obligation activity for the nine months ended September 30, 2012 and 2011 (in millions):

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Balance as of January 1

 

$

62.0

 

$

59.1

 

Changes in estimates

 

 

 

—

 

Additions

 

 

 

—

 

Accretion expense

 

2.6

 

2.5

 

Balance as of September 30,

 

$

64.6

 

$

61.6